The Ramsey Show - App - Don't Quit Your Job If It Makes Your Family Starve! (Hour 2)

Episode Date: July 31, 2019

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Music Music Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Thank you for joining us, America. It's a free call at 888-825-5225.

That's 888-825-5225. Nick is in Missouri starting off this hour. Hey, Nick, how are you? I'm good, Dave. How are you? Better than I deserve. What's up? That's great. I need you to talk me into spending my savings to pay off my truck. Ah, okay.

So what would your financial goal be? Long-term, pay the house off next, and just continue to invest from there, set myself up for retirement, not have anything to worry about. Could I summarize that by saying I'd like to become wealthy? Sure. I don't really have a number in mind. I just want to have security until the day I die and something for my kids. You want to build a nest egg so you can retire with dignity and leave an inheritance and be generous.

Sure. Okay, good. Those are good goals. That's what we teach around here, so that's perfect. Well, then the question becomes, what is the shortest path to that goal that's what that's not giving money to other people yeah well you know it's and then you start studying and say well what what if wealthy people people that started from nothing like you and me um what did wealthy people do to get there and what is their shortest path what we've discovered over the years is that your most powerful wealth-building tool is your income,

and not giving it to someone else in the form of debt is the shortest path to building wealth. Now, having said all, that's why you want to pay off the house, that's why you want to pay off the truck, but you're getting some emotional security from this pile of money that's in your account that you can pay off your truck with. So what do you owe on the truck? It's just under $24,000 that I owe on the truck. Okay, and how much money is in savings? About just shy of $33,000. Okay, and so you'd have $11,000 left if you did this.

No, $9,000 left. I'm sorry, $9,000 left if you did this. No, $9,000 left. I'm sorry, $9,000 left if you did this. Right. And what's your household income? After taxes, we've combined about $5,600 a month. Okay. All right. And so you're making about $85,000, $90,000 a year, it sounds like.

Between the two of us, yes. Yeah, that's what I'm talking about. So you've got $90,000, $90,000 a year, it sounds like. Between the two of us, yes. Yeah, that's what I'm talking about. So you've got a $90,000 income. Do you have any other payments other than your house and the truck? Debt. My daughter's in an expensive daycare. Well, that's not a debt. That's a monthly bill.

Right. Right. No other debt. Okay. All right. And so if you were doing a written budget and you and your wife sat down and said okay if we pay off the truck our next goal is to make sure our emergency fund is replenished because i'm really nervous only having nine thousand dollars truck payment is how much

uh it's 411 i've been paying 600 a month on it okay so 600 a month for 10 months would be six six thousand dollars and you'd be back to 15 if you just put back into the account only what you've been paying on the truck. And you can do more than that. I wonder if it was smarter to roll that into my mortgage payment, because I'd like to put myself on a... No, you need to build your emergency fund back up to where you have three to six months of expenses once you're debt-free other than the house.

Then I want you to start putting 15% of your income into retirement. Are you putting anything into retirement now? No, I started listening to you at the first of the year, and I met with some of your smart investors and got a lot of great information there. Okay. But you're always hounding on paying off debt. I am. I've been hung up on this for three months, and I'm finally calling you.

That's okay. That's okay. I'm just talking it through with you. I put my wife through seven years of college. Here's the thing. Here's the thing. The way this feels to you is like you're going to live with only $9,000 in your account for the rest of your life.

The way it feels to me is you're going to live with $9,000 in your account for less than a year because you're going to have built it back up very quickly. This is not really that big a move if you look at it that way. I know. I'm just so proud of that stability because I put my wife through college and built a business from scratch and lived in my truck at one point. Then sell the truck. It's a lot of hard work.

Then sell the truck. Either spend the savings or sell the truck. Yeah. You need to make a call. Well, I commute 40,000 miles a year, so I'll have to keep the truck. I guess I'm going to have to spend the savings. Well, whatever you drive, you're destroying with that many miles. So it doesn't matter.

You're going to be driving a high-mileage junkie truck before long anyway. Well, that was another question I had after paying off the truck, because I have to have a truck that's able to do some pulling. Would it be wise to spend two three thousand dollars on a little gas zipper that'll get me around for a few years to make this truck last longer uh you have to have a truck for your job no i have an expensive hobby and i have to drag trailers all over the state okay all right i don't have to i suppose it's a hobby though i got you okay well as long as you know what you're spending on your hobby and you're okay with that while you're doing these other

goals yes that's all part of the budget and well i mean you're spending twenty five thousand dollars on a truck that hauls stuff six times a year that's three thousand dollars a haul you could pay somebody to do it cheaper yeah it's twice a month but i understand the point you're making yeah either way you need to really think about it because you're destroying a very expensive truck driving it um so i i you gotta you need to separate the truck decision and the hobby as two separate decisions. And the other thing is whatever you drive, you're destroying its value with 40,000 miles a year. So I would not be driving a nice truck and destroy that value of that thing. So, yeah, if you keep it, you need to get you a $5,000 car that you destroy.

Well, because you're putting so many miles on whatever it is i mean whatever you drive becomes worthless very quickly when you put that many miles on it because you're a road warrior so you got about three different or four different things going on here that you've got to work your way through the hobby separate that over there this is what i'm willing to pay for that hobby, $25,000 of my savings so that I have a truck to do my hobby. That's what you're saying. And that's okay, but you need to say that out loud

and look at yourself in the mirror. And, you know, because what it amounts to is you've been justifying the truck saying you need that for work and you don't need it for work. You need a $5,000 car for work. That's the thing.

Or a $7,000 car or something like that. So if I were in your shoes, I would sell the truck, put the hobby on hold for a little while, and hit somebody's financial goals, and then I'd kick my hobby back in in a couple of years. Because this hobby is taking a lot of your money right now. That's what it sounds like. But you do whatever you want. I'll still be friends with you either way. We appreciate you calling.

Open phones at 888-825-5225. Thank you for joining us, America. You know, one of the things we do is, and he did that, I've done that, and you've done that, is we, especially in America, we love our cars. We love cars. And guys are our cars. We love cars. And guys are the worst. Guys love cars. I mean, ladies, they don't love cars.

They just think they're a really large purse with wheels. But, you know, guys, we love our cars. And we will justify, rationalize our butts off on why we, in quotes, need a car. And I do it, you do it, and you've got to be real careful with cars because they're the largest thing we buy that goes down in value. Now, I've got some nice cars now, but I drove like no one else for a while, so now I can drive like no one else. This is the Dave Ramsey Show.

Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has dead and has struggled to make ends meet. But they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance and the other doesn't. Big difference.

If one of the parents die, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story and it puts you on course for better things

ahead. Melanie is in Georgia. Hi, Melanie. Welcome to the Dave Ramsey Show. Hi, Dave. How are you doing today? Better than I deserve. How about you? Good.

Blessed and highly favored. Cool. So I recently resigned from corporate America to get out of the rat race and follow God's purpose for my life and to figure out what the rest of my life should look like. We're a family of four. I'm married. My husband is disabled and we have two children, preteen and teenager. My corporate job was like 85 to 90% of our income. So now we're living off his disability check, which is like 22,000 a year and child support as well. We have no debt. So when I was working, we were on baby step six. We have no debt except the mortgage, which is like 66,000. But now that we're living off my husband's check, we're back to baby step one because we've used up our emergency fund.

But we do have a long-term savings, which we pull from to supplement the disability check. So I'm just kind of in a position where I don't know what to do because we believe in the steps and we were doing the steps. We were almost baby step seven, but now we're kind of back to start one. Okay. So what is your career plan? Well, the career that I was in, I resigned from corporate America because I knew that wasn't where I belonged. So right now what I'm doing is I have the freedom and the time because I didn't have the freedom and time before, but now I have freedom and time to really seek out God's purpose for me and follow like what my gifts and my passions are. I don't necessarily have a career plan right now.

It's more of like just building my relationship with God and figuring out who he called me to be and what he called me to do, or whether it be preaching, teaching. Now I have the freedom to figure that out, if that makes sense. Okay. Well,

I completely agree with your goal of finding God's purpose. I'm not sure I agree with your process for getting to your goal. Okay. Because your family's starving to death. And that's not God's purpose for you. Right, exactly. He that doesn't take care of his own household is worse than an unbeliever. Right, no, we've applied for food stamps.

We're not completely starving, but we did apply for food stamps. You're kidding me. And you're going to call that God's purpose, that you walked out of an $85,000 a year job, and now you're on food stamps, and that's God's purpose. No, I didn't say that. Not even close. No, no, no, no. i'm just talking about me not being in the rat race for the next 50 years of my life i didn't want you to stay in the room i said i

agreed with your goals i just don't agree with how you're getting to them because you've left your family vulnerable so um you got about 30 seconds to get some income coming in okay while you're searching for God's purpose. Working while you search for God's purpose is possible. Now, possible you were in a toxic environment with 80 hours a week and they were devaluing you as a human and you were a rat in a wheel and you needed to get out of there. I don't have any argument with that. Walking out cold without a plan is not biblical.

So I want you to develop a plan here where 24-hour-a-day meditation is not feeding your family. Yeah. And you have the ability to create an $80,000-a-year income. We know that. You were doing it before. Now, I'm not suggesting you go back to a toxic environment. That's not what I'm saying. And I'm not saying you need to abandon searching for God's purpose for your life.

I want everyone to find that. I'm blessed in that I have found it. But along the way, you feed your family. That is also God's purpose for your life. Okay. And so your family's starving, and you have this fabulous ability to earn a living. What were you doing before? Training, communications, marketing, a lot of media work.

And I've been helping my husband because he's an entrepreneur, so I have been using my gifts to help his business. He's a speaker, author, entrepreneur. And then I've also been looking into photography, like taking photography classes to generate income possibly that way. So I have been using my gifts while I'm off work. But you're not making any money. Correct. I'm not generating my gifts while I'm off work. But you're not making any money. Correct.

I'm not generating income, but I am. You need to generate some income. Listen, you're articulate. You're bright. You're a great teacher, communicator, trainer. You ought to be able to do something for a little while, even if it's not, you know, maybe Paul making tents. You know what I'm talking about? What's that? You remember when the Apostle Paul making tents. You know what I'm talking about? What's that?

You remember when the Apostle Paul made tents in the Bible? In the Bible. I don't think that I know that. Okay. All right. Well, long before he was the Apostle Paul, after he met God, he was on the backside of the desert looking for God's purpose, and he was a tent maker.

He made a living. He made a living as a tent maker while he was waiting. And later, we know him as the writer of most of the New Testament. But in the meantime, he didn't starve. He worked while he was searching for God's purpose and made money while he was searching for God's purpose. And so I think that's the part that I'm missing in your story that I want to as gently and kindly as I can.

I don't want you to hear me rebuking where you're going. It's just how you're getting there because you are so valuable in the marketplace. You're worth $60,000 to $120,000 a year in the marketplace.'re worth 60 to 120 000 a year in the marketplace you have proven that yeah yeah and your family needs you to be worth that yeah i agree i want to generate income i just don't want to do it the way i was doing it i don't disagree with that but you need to get with it you know yeah and that's what i'm trying i guess what i'm trying to figure out how well that and you you don't have long. You're on food stamps.

When you have the ability to make 85 grand, you're on food stamps. So, I mean, time's up. Go make some money doing something. Even if it's not the exact perfect thing you think it has to be. You're not going to find this perfect thing, by the way, where you go, oh, that's it. That's it. That's the whole thing. There's always parts of everything you do this side of heaven that are unfun. I've got the best life in the world, and there's parts of what I do that's unfun every day.

So I get to do this show, which is three hours of fun every day, and that's God's payback for some of the crap I have to do the parts of time so you know you just you need to go make some money kiddo in a way that is not the old way but it's not the perfect utopian new way you've dialed up in your mind and um you know but and you can find god's purpose on that so i'm gonna send you a copy of ken coleman's book i think it'll help you a lot it's called the proximity principle and i will help you on this journey, but I want you to get back to making some money today. Today. For your family. There's just, that is a

process while you're looking for his purpose. That's what you need to do. Because it's just, it's a shame that you're not making money. Because you have the ability to. You're just a bright lady and you can do all these things. So hold on. We'll send you a copy of that.

Open phones at 888-825-5225. You jump in, and we'll talk. Joe is next. Joe's in Texas. Hi, Joe. How are you? Doing well, Dave. Thanks for taking my call.

Sure. What's up? So my wife and I came into a decent-sized lump sum of money that we want to invest for retirement. We're currently already investing in mutual funds, so we wanted to get your take whether we should just continue adding on to the mutual funds or if we should diversify and maybe go into like a variable annuity or maybe there's something else out there that we're not aware of. Is your home paid off? Yes, sir. Awesome.

So you're totally baby step seven. Way to go. Way to go. How old are you guys? 37, 38. Whoa. Look at you. Way to go.

Okay. Well, I invest in two things. I invest in mutual funds and I invest in real estate that I pay cash for. That's it. And so if you've maxed out retirement and you want to stay with mutual funds, variable annuities are an okay way to go. I would not do that at 37. Instead, I would look for some mutual funds that are what are called low turnover ratio mutual funds. Now, what that means is they don't sell the stocks inside the

mutual funds hardly ever. They don't turn the portfolio over. It's got like a 4% portfolio turnover rate. Okay, so they hardly, 96% sit there. And that means that it grows on a capital gains basis, so you don't pay taxes on the growth unless you cash out the mutual fund. That's the beauty of a low turnover mutual fund. And when you do cash out the mutual fund, if you've held it longer than a year, you're only taxed at 15% or in a variable annuity, you're taxed at ordinary income. So talk to one of our SmartVestor pros about a low turnover mutual fund for your additional investing after you've maxed out retirement and your home is paid for.

Especially at 37 because you can get that money anytime you want. In a variable annuity, it's trapped. And the growth is taxed at ordinary income rates. So I would not use the variable annuity tool in your situation. You can if you want, but I wouldn't. I don't. I'm 58. This is the Dave Ramsey Show. We've been voted one of the best places to work in Nashville 11 times. You want to know how we do it?

Well, our team has been using LinkedIn jobs for years to find the best people from all over the country to come and help us change lives. Think about it. LinkedIn has more than 600 million active members. I'm talking about people who come to LinkedIn to make connections, grow their careers, and discover new job opportunities. In fact, 90% of LinkedIn users are open to new opportunities, but not actively scanning job boards. This means LinkedIn Jobs gives you access to an entirely different demographic. Don't wait. One hire can change the direction of your company.

Post a job today at linkedin.com slash Ramsey and get $50 off your first job post. That's linkedin.com slash Ramsey. Terms and conditions apply. Well, guys, we're in the midst of summer. Almost, really. I mean, it feels like school's starting tomorrow. This thing went away fast.

I don't know what happened this summer. But one of the easiest ways to get back on track now that you're ready to plug back in and make sure your money stuff is on control, make sure your emergency fund is funded, check on your insurance rates. You could be missing out on hundreds of dollars of savings. The best way to get the lowest rates is to work with an independent insurance agent that shops among several companies to get you the best deal. That's what all of our insurance-endorsed local providers are, our ELPs. These are agents who work for you, not for State Farm.

They work for you, not for Nationwide. They're not a captive agent with one of the other companies. To find out who we trust in your area that has the heart of a teacher and might save you hundreds and hundreds of dollars, go to DaveRamsey.com slash ELP for insurance, or just click on insurance ELP at the website. Either way, whatever we need to do. You've got to get with one of these guys.

Hey, by the way, getting a quote doesn't cost anything. And if it's not a great quote, don't do it. It's nothing. Lost a little bit of time to ask and fill out the great quote, don't do it. It's nothing. Lost a little bit of time to ask and fill out the stuff, right? That's it. That's the whole thing. Jesse's up. Jesse's in Nevada.

Hi, Jesse. Welcome to the Dave Ramsey Show. Hey, thanks for answering the call. Sure. What's up? So last week I was on a work trip with my wife and my four-month-old in California, and we actually got in an accident, unfortunately, and the car really messed up in the front. Was that? Everybody okay?

Yeah, yeah. We're all good. Nobody was hurt. We were going pretty slow, but we hit a truck, so our car is just soft compared to that car. Sure. It's a Nissan Sentra, and we owe $10,000 on it, and its estimated value is $7,500 private party, and the repair cost would be about $3,000. Mm-hmm.

So we just don't know if we should fix the car, if we should eat the cost and get a different family car. I assume your insurance totaled it, didn't it? You don't have insurance? No, we do have insurance. We're still in the process of talking to them about it. Okay. All right.

So I suppose they're going to give you a check for $8,000 or so, and you're going to have to make a... If we had a collision on our insurance, then we totally would have. Long story, but we only had personal injury and property damage. Okay. And it was your fault? Yeah, it was. Okay. So you've lost your car.

Wow. How in the world do you not have collision and your lender lets you get away with that? Yeah, I want to know the same thing. It was my wife's insurance first before we got married and then when we got married she just put me on there it's your responsibility but your lender should have been pounding you looking through it yeah you screwed up but i mean your lender should have been pounding you so you've lost you're ten thousand dollars in the hole today wow okay um what's the because I don't know if you fix this car.

If it's a $7,000 car, do you spend $3,000 on it? Can you get it fixed cheaper than that? That's about, yeah, that's about, just a little bit of the engine was damaged, and the whole front of the car was smashed. Yeah, do you have any money? Yeah. I had about $4,000 saved and I have another $4,000 to $5,000 come in in the next couple weeks. Okay.

Well, that's good news. All right. So, if you sold this car for $3,000, you could cover the difference and have a couple grand to buy you a $2,000 car, right? Should I sell it to a private, just some guy that wants to buy a broken car? Yeah. I mean, if you fix it, okay, I guess you can spend $4,000 of your money and fix it and just drive it for a while longer with the $10,000 worth of debt on it, right?

Yeah. Yeah, that's probably what you're going to do. That's probably going to end up making the most sense. If you can get it fixed for around $3,000, use some of your money and fix the car and drive it for right now. The thing that sucks is that it's stuck in L.A., and we live in Nevada, obviously. So it's like in a completely different state, and getting all that. Like trying to sell it in a different state is harder than, obviously, selling it at home. Well, not selling it to a junkyard.

They'll come pick it up and give you money for it. But, you know, if you're going to get it fixed, you're probably going to have to have you talk. Have you priced shipping it back to Nevada? It'd be about $800. Okay. Probably going to be cheaper to fix it in Nevada than it's going to be in Nevada than it is in L.A. for sure. By 800 bucks. Easy. So you're either going to salvage the car where it sits

or you're going to move it home and fix it. You're probably going to come out better moving it home and fixing it. This is a complete pain in the butt, though. Yeah, I know. And so right now we have no car, and I was wondering also if we should get like a short-term $34,000 family car. Just go to Dollar Rent-A-Car and rent a car. Do I need a credit card for that?

A debit card. Dollar will rent. That's why we have the Dollar Car Rental Studios here on the Dave Ramsey Show, because Dollar will take your debit card. So, you know, check on that. Yeah, and let's just get this thing fixed as fast as we possibly can. Yeah. And obviously, make sure you get collision on everything you own.

Right, yeah. I've learned that, that's for sure. Yeah, when you're broke, it's just too costly. Yeah. And then you've got to have a plan to get this deck cleaned up and get rid of this car as soon as you can too but that's that's a secondary step once you get this mess you've gotten into turned around i'm sorry man that's such a pain in the butt wow wow wow wow open phones at 888-825-5225 debbie is with us in washington hi debbie welcome to the dave ramsey show it's a pleasure to speak with you, sir. I have a question.

I have been putting most of my earnings into two different retirement accounts. They're both not being taxed. So I'm putting $41 a month away. I am living on $23. And I am wondering, I'm 60 years old, I am wondering if I should still be putting money in a Roth, because I don't like the idea of not having access for five years. You're 60 years old?

Yes, sir. Why would you not have access for five years? When I've looked up information on Roth, it says that you can't touch the money that you've put in for five years. Is that incorrect? You can touch it, but you're probably going to get into some possible taxes if you do on the growth portion. The portion you put in, you can always get out of a Roth. Well, the other thing is because I am actually looking at retiring in three years. Are you going to need the money out of the account we're discussing soon?

Well, that account doesn't exist yet. I know, but if you were going to do, whatever the money we're talking about putting into a Roth, is that money you're going to need to access in the next 10 years? Yes. Don't put it in a Roth, is that money you're going to need to access in the next 10 years? Yes. Don't put it in a Roth. I would guess. Yeah, put it in a traditional.

It's not going to be in there long enough that the growth is going to be so large that it's going to matter. Okay, and that is what I was thinking. Yeah, you're right. Let me ask you one other question. Yes, ma'am. I am completely out of debt. Mm-hmm.

I drive a beautiful 2002 Subaru Outback with 212,000 miles on it, and I can get a 0% interest loan should this poor car die. And otherwise, I'd have to take the money out of my account that I are making about 12%. At what point does it make sense to get a car loan and let your money continue to make money? I've never met a millionaire that said they made their money by borrowing a car loan at 0% so they could invest. Ever. Stay out of debt.

It gives you peace. It gives you control of your life. It gives you peace. It gives you control of your life. It gives you control of your money. It sounds like you're making money, but you're taking on so much extra risk with the thing. You're not offsetting your risk. You're not offsetting the perceived returns with the extra risk they're taking. So, that's the deal. Hope that helps you.

This is The Dave Ramsey Show. neely is next in texas hi neely welcome to the Dave Ramsey Show. Hi Dave, I feel very honored that you're taking my call. I just have a quick question on life insurance. So I'm currently leading a class right now locally in my hometown and we just had lesson six. I'm sorry, I'm leading an FPU class and we just had lesson six on insurance. And a couple of years ago, me and my husband both got a $500,000 term insurance policy because we have a two-year-old son. Great. Well, recently, I've just went through a divorce about six months ago, and I'm currently right now on step six. And my concern is, so I don't have, I know you recommend 10 times worth your income. And so that would be a little over, that would be about $1.1 million on the insurance policy.

And I don't have that. I have $500,000. But being that I don't have any debt other than my home um i'm type one diabetic and so i know that it's a little bit more difficult to get insurance yeah and so i was i was just wondering do you recommend me trying to increase my policy to what you recommend or no okay i i'm gonna guess and say that if something happened to you, your child would go to live with your ex. Yes, sir. Okay.

And so your child is taken care of. Yes, sir. Plus, your child would have a half a million dollars in a trust account, which is who should be the beneficiary, by the way. Yes, sir. On the policy. It should not be left to your son. It should be left to a trust account in his benefit. Okay. You did say little boy, didn't you? Yes, sir. On the policy. It should not be left to your son. It should be left to a trust account on his benefit. Okay.

You did say little boy, didn't you? Yes, sir. Okay. And so, and that way, the money has to be used only for him. It can't be used by your ex to buy a new car. Okay. Sure. Yes, sir.

You leave it as beneficiary on your current policy. But if your son had a half a million dollars in an account that could be used to help him buy his first car, that could be used for medical problems if he had them, could be used to send him to college, and whatever's left could be used to help him get his life started, and your husband gave him food, shelter, clothing, your ex-husband gave him food, shelter, and clothing, then we've provided for the child, which is the whole idea here. We want to make sure if you die and your income's not there that your kid is okay right because i i do have a 529 set up for him that i'm putting in every month so and in it so

in addition to the 500 000 he'd have that sure sure okay well i just wanted to i that's what i was kind of thinking i just you're a huge role of mine, and so I just wanted to hear it from the horse's mouth, you know, just to make sure. It may have been the horse's mouth. We don't know which side. Thank you so much for taking my call. The whole purpose is, if you just kind of think through why do we save 10 times, because that amount invested would replace your income for a family unit that is used to living on your income.

In your case, the family unit would be reformed or restructured in the event you died, right? Yes, sir. And so then we start saying, okay, what would be the purpose of life insurance? It would be to take care of this baby. And then you start saying, is a half a million plus a 529 given that your husband's going to feed him and ex-husband going to feed him and give him shelter going to be okay yeah that's going to be more than okay okay okay you see how i got there yes sir i sure do and i kind of thought the same thing because you know i mean i knew that it was important whenever we got the

life insurance policy because i had a spouse at the time, you know, and so now that I don't, I was thinking that I wouldn't need to increase it. And I knew, too, that just with my, you know, medical condition that it would probably be difficult. And so it is difficult and it's also expensive. Yeah. Because diabetes gets rated like cancer and heart attack. Sure.

I mean, those are the three toughest things to get life insurance. Well, I think it's pretty affordable right now, you know. It's better than it was, but it's a tough one to get. And so it's just expensive. You can get it, but it sure isn't premium rates. Sure. So I think you're in good shape there. If I were you, if I were in your shoes, I would feel very good about where you are without adding any coverage.

So, hey, good question. And thank you for leading a Financial Peace University class. We appreciate it. All right, up next is going to be Scott. Hey, Scott, welcome to the Dave Ramsey Show. Hey, Dave. Pleasure to speak with you. You too, man.

How can I help? So my wife and I, before we started your program, we went and got ourselves a 30-year fixed mortgage that we can now that we're aware of your program. We're paying it at a 15-year. Good. And it's about 35% of our take-home pay. Okay. We really like the house, but now we just found out my wife's pregnant.

Yay! She's our first child. Thank you. We both want her to stay home. Good. But that's going to take our income down, and it's going to put our mortgage at about 45% of our take-home pay. Would you suggest that we should move to a house that we could afford? Okay.

Yes, unless your income's going to go way up real quickly. It's going to go up. I've had this talk with my manager. I said, where do you see me in 10 years? And he said he can put me up another $10,000 over time, but I don't know how soon that's going to be. What do you make? I'm making $55,000 right now.

Okay. Here's the thing. When your house you make? So I'm making $55,000 right now. Okay. Here's the thing. When your house payment is half of your take-home pay, there's two problems. Number one, everything's destabilized because it's like you're walking around carrying 300 pounds on your back. You can do it if you're strong,

but every little bump in the road causes you to trip and fall and break your face you know it's just you know what i'm saying it's just the way that you just added this immense weight and so it destabilizes the number one problem number two problem is you're poor you're house poor you don't have any money to do any wealth building you don't have any money to buy the next car you don't have any money to fund kids college you don't have any money to do any wealth building. You don't have any money to buy the next car. You don't have any money to fund kids' college. You don't have any money. And so I think her coming home, if that's her desire, is a great choice,

but it probably doesn't mean she's coming home to that house. Right. Now, you don't have to sell the house immediately. You might try it for a year if you want to and just see how things go. But, you know, I think you're going to find that what I'm saying is true. You're going to feel like you're walking around with 300 pounds of feed sacks on your back. Yeah, we ran the budget out, and we can make it work, but that's exactly right. Like, we have very little wiggle room at the end of everything.

Yeah, you're on the end of a razor. I everything. Yeah, you're on the end of a razor. I mean, you're walking around on the end of a razor. And it's just not sustainable. You can pull it off for a little while, but long term, you're going to be destabilized and be unable to build wealth and do life well. And it's not going to be worth it just for a stupid house. So you can try it for a little, you know, go ahead and have the baby come home, talk about moving in the first year that she's home or something like that,

and really watch her budget. But don't you dare call me back a year after the baby and go, well, you know, we ran a bunch of credit card debt because we weren't watching our budget, and she came home and we didn't make it work, okay? Fair enough. Fair enough. You got it. Hey, thanks for the call, man.

And congratulations on the new baby. It's worth the sacrifice to be in a smaller home to have a good life and mom be at home with the baby if that's what mom's call is. And it sounds like it is in this lady's life. So very, very cool. Thank you for joining us. Open phones at 888-825-5225. We're on Baby Step 2. David on Facebook says, I have a 15-year-old central AC unit, and I'm afraid it might need to be replaced soon.

I'm afraid you're right. Do I need to start setting aside cash to anticipate its replacement? No. You need to get out of debt because you have a 15-year-old AC unit that's going to go kaput, and you better be ready. But you had that before you started getting out of debt. You need to get out of debt so you can fix this thing, replace it, because it ain't going to go much longer. I agree with you. You've about gotten all out of that puppy.

You're going to get out of it. So, yeah, but no, just I don't I don't. If you want to stop doing your total money makeover, that's up to you. I don't suggest stop doing your total money makeover over fear. I'm afraid you didn't write me and say it's broken, Dave. I'm screwed. In which case, I would tell you, go to Walmart, buy some fans, and keep working the plan. That's what we did in the old country in the old day.

Back in the day, we got Winder fans. I didn't. I had air conditioning, but I mean, you know, that's what some of you are thinking when you hear me say that stuff. There you go. Now, so, yeah, don't do stuff based on fear. That fear should drive you to get your act together. This is The Dave Ramsey Show.

This is James Childs, producer of The Dave Ramsey Show. Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at daveramsey.com slash show.